We have a new option in the July update for playback of 4:3 video, in the Player settings: “Use HDMI AVI signalling”. This is a great addition for playing DVD remuxes - for the first time, we can now get the correct aspect ratio for both 4:3 and 16:9 material, with no loss of resolution, and the correct AR being selected automatically instead of having to do it manually.
This is an option which only makes sense for standard-definition videos. If I’m playing (say) a 1440x1080 video, this option should be ignored, and the default should be to display the video pillar-boxed. This feature is needed for SD because SD video is generally 720x480/480 or 720x576/50, and it’s only the metadata which tells the playback device whether it is to be played at 16:9 or 4:3. But in the case of a 1440x1080 video, the aspect ratio is provided by the actual video data, and you don’t need to signal a 4:3 AR.
What my Vero 4K+ seems to be doing at the moment is to stretch the video to 1920x1080, then tell the playback device to display it with a 4:3 aspect ratio. The most visible consequence of this is that subtitles appear horizontally compressed. If it’s doing what I think it’s doing, there will also be some unnecessary horizontal upscaling going on (before the subtitles are added) - if so, that will compromise image quality a little.
I’ve always been dubious about Kodi applying the central 4:3 Playback settings to HD-resolution 4:3 videos; but it makes even less sense with the new option.